Asia stocks struggle; Japan at 7-month high

SarahTurner

ChrisOliver

HONG KONG (MarketWatch) — China stocks struggled unsuccessfully Thursday to sustain a second day of gains, while Tokyo markets outperformed as a weaker yen supported exporters and as investors looked toward the nation’s general election later this month.

More broadly around Asia, stock markets were split between gainers and losers, while a composite index for the region, the Asia Dow, was up 0.2%.

Japan‘s Nikkei Stock Average
NIK, -1.00%
rose 0.8% to close at its highest level since April 26, while South Korea’s Kospi
SEU, -0.26%
ticked up 0.4%.

In Hong Kong, the Hang Seng Index
HSI, -0.73%
traded basically flat, retreating 0.1% after gaining 2.2% on Wednesday to close at a 16-month high.

The Shanghai Composite Index
000001, -0.38%
slipped 0.1%, paring an almost 3% gain from the previous day, when it rebounded from a 46-month closing low.

Japan politics

Japanese political news appeared better received by the local market, after a Nikkei opinion poll Thursday showed the main opposition Liberal Democratic Party on track to reach a majority in the election on Dec. 16.

The LDP and its leader, former Prime Minister Shinzo Abe, are broadly in favor of applying looser monetary policies.

“Every time there ‘s a change in leadership in Japan, a little bit of optimism gets thrown in because it’s assumed that policy will have to change,” said Louis Capital Markets’ head of Japanese equities, Ben Collette, in Hong Kong.

Collette said he expected a mild correction in Japanese stocks, as the yen was overdue for a rebound following its sharp decline in recent weeks.

In the coming year, Collette expects further weakness in the Japanese currency to underpin gains in Tokyo stocks.

“Once the yen pushes back to 90 [to the U.S. dollar,] you are going to have a hard time buying enough stock in the names that everyone knows,” Collette said. He adds that he’s been advising clients to look toward consumer-oriented exporters such as Sony Corp. and Sharp Corp.

Toshiba Corp.
6502, -1.64%TOSYY, +0.12%
rose 0.7%, but Panasonic Corp.
6752, -1.61%US:PC
slipped 0.5%. The two firms were among six slapped with fines by the European Union on Wednesday for allegedly fixing prices on television and computer-monitor cathode-ray tubes.

Meanwhile Standard Chartered PLC
2888, -1.68%STAN, -2.72%
said that it would likely pay around $330 million in fines to settle with U.S. authorities over transactions with Iranian clients that may have violated U.S. sanctions.

Meanwhile, Chinese equity analysts said the failure of Shanghai to sustain the prior day’s rally was a reflection of investor wariness towards chasing stocks after a nearly three year slide in the stock index.

Mainland property companies, extended gains after helping to lead the market higher Wednesday — when investors drew optimism from signs that Chinese leaders will continue to promote supportive economic policies.

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